Question : The saving function of an economy is given as S= -40+0.40Y. If the planned investment is Rs. 250 crore. Calculate aggregate demand at income of Rs. 400 crore.
Option 1: 650
Option 2: 600
Option 3: 725
Option 4: 800
Correct Answer: 725
Solution : S= -40+0.40Y
C= 40+0.60Y
I= 250
AD= C+I
Y= 40+0.60Y+250
0.40Y= 290
Y= 725 crore
Hence, Option C is correct.
Question : The saving function of an economy is given as S= -40+0.40Y. If the planned investment is Rs. 250 crore, Calculate equilibrium level of income in the economy.
Question : The equilibrium level of income in an economy is Rs. 3000 crore. The autonomous consumption expenditure is equal to Rs.250 crore and investment expenditure is Rs. 1000 crore. Calculate saving function.
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Question : In an economy, the investment expenditure is Rs. 80 crore and consumption function is C= 80+0.75Y. Calculate equilibrium level when planned investment expenditure is increased by Rs. 10 crore.
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